'Is this a red line for us?' $15b European trade deal doomed if Australia dodges Paris pledge

The Coalition's internal climate war risks damaging the economy after Europe declared it would reject a $15 billion trade deal with Australia unless the Morrison government keeps its pledge to cut pollution under the Paris accord.

He has reaffirmed his government’s commitment to the Paris accord despite persistent calls by conservative Coalition MPs, led by Tony Abbott, to quit the agreement.

However there is deep uncertainty over how Australia will meet the Paris goal of reducing Australia’s carbon emissions by 26 per cent by 2030 given the government does not have a national strategy to meet the target.

The policy ructions did not go unnoticed at a meeting of the European Parliament's Committee on International Trade in Brussels, where the EU’s chief negotiator on the deal, Helena König, faced angry questions from the floor over Australia’s commitment to climate action.

In a video of this week's proceedings, Ms König told the committee that “it’s the [European] Commission’s position ... that we are talking about respect and full implementation of the Paris agreement [as part of the trade deal]”.

“No doubt we will see what comes out in the text [of the deal agreement] but that I expect to be the minimum in the text, for sure.”

Her assertion is a clear signal that any failure by Australia to meet its international climate obligations would have serious economic consequences.

Ms König fired off the warning after a question by Klaus Buchner, a German Greens member of the Parliament who said “the intention of the new Australian regime to withdraw from the Paris Agreement unsettles not only Australians”.

“Australia is by far the biggest exporter of coal in the world ... what will the commission do when Australia does indeed withdraw from the Paris agreement? Is this a red line for us in these discussions or do we just accept it?

“I believe as the largest trading block in the world we have a responsibility to go beyond pure profits.”

Australia’s ambassador to the EU, Justin Brown, hosed down suggestions the Morrison government would exit the Paris deal.

“Australia is a country that stands by its international commitments. We’ve made commitments in the Paris agreement context. We are committed to those as we are committed to global action to address this global challenge,” he said at the meeting.

Committee chair Bernd Lange pointed to a resolution adopted by the European Parliament in July to never conclude a trade agreement "without a reference to the Paris climate agreement and the implementation [of emissions reduction].”

The EU bloc is Australia's second largest trading partner, third largest export destination and second largest services market. The EU was also Australia's largest source of foreign investment in 2017.

The government says a free trade deal would benefit Australian consumers and businesses through better access to goods and services at lower prices, while enabling Australian producers to tap a market of half a billion people and a GDP of US$17.3 trillion.

Mr Morrison, who is in Jakarta for trade talks, declined to comment on the European Parliament's position.

Environment Minister Melissa Price said Australia "stands by the international commitments it makes" and has a strong track record of meeting emissions reduction targets.

"Australia is on track to beat our 2020 Kyoto target by 294 million tonnes and we are confident Australia will also meet its 2030 target," she said.

The Paris climate accord is deeply unpopular with conservative MPs, including Nationals MPs whose electorates would benefit from an EU trade deal. Keith Pitt resigned as an assistant minister last week in protest at the Paris treaty.

"I will always put reducing power prices before Paris," he said.

A 2017 report by the United Nations environment program that found Australia’s emissions were set to far exceed its Paris pledge and government data released in January showed Australia's annual emissions had risen for the fourth year running.

Labor’s climate change and energy spokesman Mark Butler said the government had no emissions reduction plan and would fail to meet its Paris goal.

“The Prime Minister might think he can get away with [failing to cut emissions] domestically, but it is clear it will not be accepted by our international trading partners, who rightly have an expectation the Australian government will act to deliver on our international obligations,” he said.

European Australian Business Council chief executive Jason Collins, whose organisation has lobbied for the trade deal, said Europe’s commitment to the Paris agreement was "fundamental".

"The fact that Australia and Europe share similar values and have made joint commitments to trade liberalisation, combating terror, and addressing climate change, among other things, has been the starting point for launching these negotiations," he said.